Ask The Taxwise Expert: Mitigating the penalties of late Self Assessment Tax Returns

Peninsula Team

August 06 2013

Q) I have recently had a client approach me with a view to completing and submitting his outstanding Self Assessment Tax Returns.  There are several years involved in order to bring his tax affairs up to date.  He is however concerned that he will be charged large penalties and has asked if there is any way of mitigating his exposure.  A) Unfortunately the longer the problem goes on the worse the penalty situation can be when you are faced with a client in this position and onerous penalties including daily penalties of up to £60 per daily can easily be levied. However help is at hand with HMRC advertising their latest campaign aimed at taxpayers in this very position.  The ‘My tax return catch-up’ campaign was launched on the 9th of July.  It is aimed at taxpayers who have received a self assessment tax return or notice to complete a tax return for any year up to 2011/12 but have not as yet completed and submitted their returns. Taxpayers who wish to take part should inform HMRC.  They then have until the 15th October 2013 to complete and submit the outstanding returns and pay the tax and National Insurance contributions due (or claim a repayment that might be due).   For 2009/10 the easiest way is to submit the returns online. Taxpayers will need to register for HMRC online services.  If taxpayers are unable to complete online then paper returns can be used.  These can be downloaded from HMRC’s website. By taking part in the campaign those who do come forward will benefit from a reduced penalty of 10% of the tax due which is much lower than the potential 100%! The other benefit of course is your client’s tax affairs will be brought up to date. Once the outstanding tax returns have been submitted the outstanding tax is due before 15 October.  If there is an overpayment of tax this will be reviewed and repaid if appropriate.  Any overpayments of tax and National Insurance contributions for 2008/09 and earlier are now out of time and cannot be repaid unless determinations have been issued in the last twelve months, the determined tax was paid and the resulting liability is reduced as a result of submission of a correct self assessment. If a taxpayer cannot afford to pay what is owed HMRC will consider a payment arrangement to spread the payments.  However this will of course be dependent on the particular circumstances. After 15th October taxpayers who have not submitted their returns could face penalties or up to 100% of the tax or indeed be subject to criminal prosecution. More information is available on HMRC’s website or a telephone call can be made to HMRC’s dedicated helpline on 0845 601 8818. If you need any further information please call us on 01455 852550.

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